T-Mobile’s Binge On frees Netflix and Hulu from data caps, but not YouTube

T-Mobile USA will exempt a list of video streaming services from monthly data caps with Binge On, a feature that could let some subscribers watch more clips and shows without buying a more expensive plan. PHILADELPHIA (CBS) — The country’s third-largest wireless carrier is making a play to woo customers from Verizon and AT&T- and it’s all about streaming video.The Bellevue-based cellphone service provider said that watching video on Netflix, Hulu, HBO, WatchESPN and about 20 other apps no longer would count against mobile data usage.NEW YORK (AP) — Streaming video from Netflix, HBO and other leading services will no longer count toward data limits under T-Mobile’s higher data plans.

Those users will have to be happy with DVD-quality video, though, because that’s all they’ll be able to get on those services if they switch on the Binge On setting. T-Mobile already exempts many streaming music services from data limits, but audio does not use as much data as video — a few hours of which can quickly eat up an entire month’s allotment under some plans. TMUS -3.97 % said Tuesday it wouldn’t charge customers for the data used to stream video from services such as Netflix, Hulu and HBO, opening a new front in the wireless price war.

And when you’re mirroring to a big screen, say with a streaming stick that’s not on the mobile network but on Wifi, the Wifi (and higher-definition video) takes over automatically. The move by the Bellevue-based carrier is meant to satisfy growing demand for mobile video while stemming the rise in penalties for going over data caps.

It’s an attractive proposition for consumers, and T-Mobile said it can pull the offer off without overwhelming its network and undermining profits because it’s working with media companies to optimize their apps. T-Mobile’s competitors don’t have anything similar. “Customers have a huge and increasing appetite for new and innovative ways to use their smartphones,” T-Mobile Chief Executive John Legere said. “But what I see is there’s amazing content being created, but it’s being created for movie and TV screens. Missing from the initial launch for now are some of the biggest mobile video services, including Alphabet Inc.’s YouTube, Facebook Inc. and Snapchat. A big, big portion of data is wasted.” T-Mobile’s new system pushes for video streams, which will come in 480p resolution, to be three times more efficient in data usage. Still, T-Mobile’s move is surprising because U.S. carriers have built their business on demand for wireless data and mobile video usage has been surging.

While it could forfeit potential data revenue, T-Mobile said the shift would ultimately boost its revenue by attracting more subscribers to its service. T-Mobile says there are no financial arrangements with video providers to be included, and any service can qualify by meeting technical requirements the company is posting online. Not counting certain content against data caps has raised net neutrality concerns among some critics who worry the practice could give entrenched content providers an edge over new and smaller competitors. But all customers will benefit from T-Mobile’s new video-optimization technology, which the company says means three times as much video for the same amount of data. T-Mobile says it has advanced software to distinguish video from other types of data but it can’t pick out certain kinds of streams, such as those that use the HTTPS secure Web format.

Chief Operating Officer Mike Sievert predicted that YouTube would join the plan, but that it would “take some collaboration” between the companies. Normally, “data is wasted because on smaller-screen devices, you don’t need to get all that data to get a great picture,” said Andrew Sherrard, T-Mobile’s chief marketing officer.

The carrier’s Music Freedom service, introduced earlier this year, has grown to cover more than 95 percent of music streaming services, the company said. Among his jabs: Video streaming from Verizon’s new Go90 app and AT&T’s DirecTV app will be covered by Binge On. “Just because we can,” Legere said. The carrier is exploring new compression technologies that should allow higher resolution with the service in the future, said Neville Ray, T-Mobile’s CTO. Subscribers who still have unlimited data plans also benefit from Binge On, because it gives them unlimited streaming when using the phone as a mobile hotspot, T-Mobile says.

It expects video consumption to accelerate because of the new offering, noting that customers with unlimited data consume more video than those on tiered data plans. Starting in January, those subscribers will also get one free video rental per month from the Vudu service. “If offering exemptions is so easy for T-Mobile, why do we need the caps in the first place?” Free Press Policy Director Matt Wood said in a prepared statement. “Exemptions for selected streaming-video services prove there’s no legitimate reason to impose data caps.” It eliminated two-year service contracts and the device subsidies that came with them, began allowing more frequent upgrades on phones, started handing out free, high-end Wi-Fi routers and opened plans to cover all of North America.

AT&T and Verizon, which dominate the industry, have adopted some of T-Mobile’s strategy, like installment plans for phones rather than a two-year service contract. Legere acknowledged investors have raised concerns about T-Mobile handing “stuff out for free.” But he counters that it’s causing consumers to switch to T-Mobile. In other moves that may push customers away from high-quality streaming, T-Mobile on Tuesday raised the price of its unlimited data plan for new, single subscribers.

When that plan was announced, observers questioned where the music offering would violate net neutrality rules that bar prioritization or traffic discrimination. Verizon, for instance, launched a mobile video app it is hoping to fund largely via advertising, rather than just by having customers pay for it only via larger data packages. “We know there is a ceiling,” Verizon Chief Financial Officer Fran Shammo said at an industry conference in May.